BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 1161
Author: Beall (D)
Amended: 4/29/14
Vote: 21
SENATE HEALTH COMMITTEE : 7-0, 4/24/14
AYES: Hernandez, Morrell, Beall, DeSaulnier, Evans, Monning,
Wolk
NO VOTE RECORDED: De León, Nielsen
SENATE APPROPRIATIONS COMMITTEE : 6-1, 5/23/14
AYES: De León, Gaines, Hill, Lara, Padilla, Steinberg
NOES: Walters
SUBJECT : Drug Medi-Cal
SOURCE : Author
DIGEST : This bill requires the Department of Health Care
Services (DHCS) to seek a waiver of the federal Medicaid law
prohibition against federal matching funds being available for
services provided in an Institution for Mental Disease (IMD) so
as to provide short-term residential treatment in facilities
with bed capacities in excess of 16 beds meeting specified
criteria, and short-term inpatient medical detoxification in a
free-standing acute psychiatric and chemical dependency recovery
hospital.
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ANALYSIS :
Existing law:
1.Establishes the Medi-Cal program, administered by DHCS, under
which qualified low-income individuals receive health care
services. The Medi-Cal program is, in part, governed and
funded by federal Medicaid provisions.
2.Excludes, under federal Medicaid law, federal financial
participation (FFP) for any payments for care or services for
an individual under age 65 and who is a patient in an IMD.
This is known as the "IMD exclusion."
3.Defines an IMD, under federal law, as a hospital, nursing
facility, or other institution of more than 16 beds, that is
primarily engaged in providing diagnosis, treatment, or care
of persons with mental diseases, including medical attention,
nursing care, and related services.
4.Establishes specified Drug Medi-Cal (DMC) reimbursable
services for Medi-Cal beneficiaries. Requires, effective
January 1, 2014, Medi-Cal to provide coverage for additional
mental health and substance use disorder services included in
the essential health benefits (EHB) package adopted by
California (the state adopted the Kaiser Small Group Product
as the state's EHB for the individual and small group health
insurance market).
This bill:
1.Requires DHCS to seek a Section 1115 waiver of federal law to
receive FFP under DMC.
2.Requires DHCS to seek a waiver of the IMD exclusion to provide
short-term residential treatment in facilities with bed
capacities in excess of 16 beds and short-term inpatient
medical detoxification in a hospital setting, including, but
not limited to, free-standing acute psychiatric and chemical
dependency recovery hospitals.
3.Implements this bill only to the extent federal approval is
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obtained and to the extent that FFP is available.
4.Makes legislative findings and declarations regarding the
changes made by the Affordable Care Act (ACA) and state law
related to mental health and substance use disorder services,
the number of Californians in need of those services, the
federal IMD exclusion and state capacity for residential care
and medical detoxification. States legislative intent to
expeditiously expand statewide capacity for mental health and
substance use disorder treatment services.
Background
IMD exclusion . The IMD exclusion prohibits FFP from being
available for any medical assistance under federal Medical law
for services provided to any individual who is under age 65 who
is a patient in an IMD unless the payment is for inpatient
psychiatric services for individuals under age 21. The IMD
exclusion was designed to ensure that states, rather than the
federal government, continue to have principal responsibility
for funding inpatient psychiatric services. Under this broad
exclusion, no Medicaid payment can be made for services provided
either in or outside the facility for IMD patients in this age
group. The IMD exclusion is unusual in that it is one of the
very few instances in which federal Medicaid law prohibits FFP
for care provided to enrolled beneficiaries.
Medicaid waivers . When DHCS wants to make significant changes
to its Medicaid program, it must amend its State Medicaid Plan
(the state's contract with the federal government), and (if
needed) receive an exemption or Medicaid waiver from portions of
federal Medicaid law. California has used Medicaid waivers to
provide additional services to specific groups of individuals
who were not eligible for FFP, to limit services to specific
geographic areas of the state, and provide medical coverage to
individuals who may not otherwise be eligible under Medicaid
rules. An example of a provision of Medicaid law that is waived
is the federal "freedom of choice" requirements. Waiving this
requirement allows California to require Medi-Cal beneficiaries
to receive benefits through managed care plans.
DMC waiver proposal . DHCS will be requesting a waiver from CMS
to operate DMC as an organized delivery system. DHCS states the
waiver will give state and county officials more authority to
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select quality providers to meet drug treatment needs. DHCS
indicates the waiver will support coordination and integration
across systems, increase monitoring of provider delivery of
services, and strengthen county oversight of network adequacy,
service access, and standardized practices in provider
selection.
Expansion of Drug Medi-Cal benefits and the IMD exclusion . As
part of the implementation of the ACA in 2013, the DMC benefit
was expanded to require Medi-Cal to provide coverage for
additional substance abuse disorder services. These additional
benefits included services in the EHB adopted by the state, and
an additional preventive service. Effective January 1, 2014,
eligible Medi-Cal beneficiaries may receive these expanded
substance use disorder services:
Intensive Outpatient Treatment: Currently a DMC benefit, but
limited to pregnant and postpartum women, children, and youth
under the age of 21. This service will be available for the
overall Medi-Cal population;
Residential Substance Use Disorder Benefit: Currently a DMC
benefit, but limited to pregnant and postpartum women. This
service will be available for the overall Medi-Cal population;
Voluntary Inpatient Detoxification: This service will be
available to the general population and is not limited to
individuals with a medical condition; and
Screening and Brief Intervention: This service will be
available to the Medi-Cal adult population for alcohol misuse,
and if threshold levels indicate, a brief intervention is
covered. This service would occur in primary care settings.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs up to $150,000 to develop a waiver application
by DHCS (General Funds and federal funds).
Unknown increased federal funding for services provided in the
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Drug Medi-Cal program by local governments (federal funds).
Under existing law, counties provide and pay for residential
drug treatment services for pregnant and post-partum women.
Under existing federal law, federal matching funds are not
available for services provided in an IMD with more than 16
beds. In effect, this "IMD exclusion" means that counties are
providing some services through Drug Medi-Cal without
receiving federal matching funds. To the extent that this
bill results in the federal government waiving the IMD
exclusion, counties will receive additional federal funding.
Annual costs of about $50 million per year to the state (and
about $70 million in additional federal matching funds) to
provide additional services in the Drug Medi-Cal program that
were newly authorized as of January 1, 2014 (General Fund and
federal funds).
Under the terms of the state's 2011 realignment, the state is
responsible for any new services authorized in law for
realigned programs, including Drug Medi-Cal. As part of the
state's expansion of Medi-Cal, the state expanded both the
population eligible for Medi-Cal and the benefit package
available in Medi-Cal. As of January 1, 2014, all Medi-Cal
beneficiaries are eligible for residential treatment and
inpatient detoxification services (previously those benefits
were only authorized for pregnant or post-partum women).
However, because those services cannot be provided in an IMD
under federal law and there are very few non-IMD providers of
those services, the federal government did not accept the
state plan amendment proposal to add those services to the
Medi-Cal benefit package. Thus, the state will not provide
those services any Medi-Cal beneficiaries other than the
previously eligible pregnant and post-partum population,
despite the authority in existing law.
If the federal government were to waive the IMD exclusion
under this bill, it is likely that the federal government
would also allow the state to add those benefits to the
Medi-Cal benefit package. In that case, the state will be
responsible for paying for the non-federal share of the cost
to provide those benefits to Medi-Cal beneficiaries.
Increased federal funding of about $20 million per year for
benefits provided to the newly eligible Medi-Cal population
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(i.e. childless adults). Over time, the state will assume a
share of this cost, rising to 10% of total costs by 2020.
SUPPORT : (Verified 5/23/14)
California Association of Alcohol and Drug Program Executives,
Inc.
California Hospital Association
California Mental Health Directors Association
California Opioid Maintenance Providers
California Psychiatric Association
California State Association of Counties
County Alcohol and Drug Program Administrators Association of
California
Drug Policy Alliance
Impact Drug and Alcohol Treatment Center
ARGUMENTS IN SUPPORT : The County Alcohol and Drug Program
Administrators Association of California writes in support that
the major obstacle to expanded treatment for addiction through
Medicaid is the federal IMD exclusion, and the unintended
consequence of this restriction is discrimination against people
who need help.
The California Hospital Association (CHA) writes that hospitals
play a central role in the delivery of mental health and
substance use disorder treatment. CHA states there are
approximately 6,600 inpatient psychiatric and 800 chemical
dependency beds available for the 38 million individuals living
in the state of California. Unfortunately, over 500 of the 800
available substance use disorder beds fall under the federal IMD
exclusion. CHA supports obtaining a waiver of the IMD exclusion
for short-term inpatient medical detoxification in free-standing
acute psychiatric and chemical dependency recovery hospitals.
The California Psychiatric Association (CPA) writes the original
purpose of the IMD exclusion was to disincentivize states' use
of institutional forms of care for mental illness in an early
era that favored and promoted non-institutional models of care.
CPA writes that some forms of care, such as residential drug
treatment and medical detoxification, which require residential
treatment in excess of 24 hours for patient populations between
22 and 65 years of age, are in fact the community standard of
care, medically necessary, and represent the least restrictive
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option consistent with good care, and there is sufficient
justification for FFP for these services.
JL:e 5/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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